A class action lawsuit has been filed inn New York alleging that Kalshi runs an online sports betting platform without the necessary licenses, even in states where such gambling is prohibited.

The lawsuit, spanning 42 pages, maintains that Kalshi’s platform offers what it terms a “prediction market,” where users can buy and sell “event contracts.” According to the lawsuit, these event contracts function like bets since they involve the trading of valuable items based on outcomes that the parties involved cannot influence.

The complaint notes that in January 2025, Kalshi introduced sports-related “contracts” to its platform, and by September of that year, it had broadened its offerings to resemble traditional sports betting styles, with 90 percent of the company’s transactions derived from sports betting.

The document claims that the sports categories offered by Kalshi are effectively similar to conventional sports betting, which is prohibited in many states where Kalshi operates. Nevertheless, the lawsuit asserts that Kalshi advertises its services as legally permissible across all 50 states in the U.S., promoting its platform as a legitimate option for sports betting.

One example cited in the complaint includes an advertisement that states, “…[Y]ou can legally bet on NFL in all 50 states using Kalshi,” while another, designed to resemble a news article, asserts, “Breaking news: Sports betting in California is now legal. New York-based prediction market Kalshi has legalized sports betting in all 50 states.”

Furthermore, the lawsuit accuses Kalshi of engaging in betting activities through subsidiaries named Kalshi Trading and KalshiEX, as well as collaborating with hedge funds such as Susquehanna International Group.

According to the lawsuit, these subsidiaries and hedge funds “bet against consumers when their bets diverge from Kalshi’s internal projected odds,” which essentially compels players to gamble against the house, giving Kalshi an advantage in the betting market due to insider information and advanced research and predictive technologies.

The complaint contends that this practice enables Kalshi, similar to a traditional sportsbook, to consistently skew the odds in its favor, minimizing its financial exposure while taking even more money from consumers, who assume they are competing against fellow players.

The lawsuit claims that Kalshi consistently presents itself as a “peer-to-peer market,” distinguishing it from sportsbooks; its co-founder has stated that “Kalshi doesn’t win when our customers lose, which creates a fair, transparent environment for people to trade.”

Furthermore, Kalshi’s official Reddit account reportedly mentioned, “[W]e’re a free market, not a book. We don’t set the odds; we open a market and let people trade on it, and where the market settles is what the odds are.

This is significant because it means we’re not profiting off of people from fees charged on accepted wagers. Sportsbooks are a business, but we’re a business and a public good.”

The lawsuit contends that Kalshi’s business framework is fundamentally built on profiting when its customers incur losses.It claims that the company is misleading consumers regarding the true essence of its “market” and the equity of its betting practices, as well as highlighting the alleged illegality present in various states.

According to the complaint, this alleged illegality indicates that Kalshi’s platform operates without any regulatory oversight.It charges that, in the absence of proper regulations, Kalshi has exploited this gap by utilizing aggressive advertising methods, promotional campaigns, and partnerships that don’t fully inform users during registration about the gambling nature of the platform or that they are betting against the house.

Additionally, it has engaged with college organizations and sponsored a teenage gaming influencer.

The lawsuit expresses concern over Kalshi’s strong emphasis on marketing to younger audiences, particularly since it reportedly has no effective regulations or protective measures in place, which raises alarms due to the addictive nature of gambling and the harmful effects related to gambling addiction.

This class action lawsuit aims to represent anyone in the United States who has spent money placing bets on Kalshi’s online or mobile platforms.